After cut in RDF to 1%, mandi board in for tough time with ₹800-cr loss

CHANDIGARH: The Punjab state agricultural marketing board (mandi board) is heading for tough times with the Centre imposing a temporary cut of 2% on release of rural development fund (RDF). The RDF is charged on procurement by the state to predominantly fund development in rural Punjab.

The Centre’s cut led to a straight loss of Rs 800 crore in the last (kharif) season of paddy procurement,

The mandi board owes at least Rs 3,775 crore to banks and financial institutions and due to fall in RDF from 3% to 1%, its major revenue source, its finances are likely to be stressed. The state government has also pledged future revenue accruals from the RDF to finance farm debt waiver scheme. The previous regime of Parkash Singh Badal’s has also funded its pet project of sangat darshan was funded the same way.

After much insistence, state last month was allowed (by the Centre) a sum of Rs 410 crore on paddy procurement which is 1% of the total expenditure (Rs. 41,000 crore) on 205 lakh tonne that state agencies procured.

The state rural development board, which has the CM as the ex-officio head, and falls under the administrative control of state’s finance department, manages the RDF.

In the watered-down debt waiver scheme, 5.5 lakh farmers were given a debt waiver of Rs 4,600 crore and Rs 1,800 crore is pending. As an extension of the scheme, Rs 520 crore is to be paid to 2.85 lakh land-less labourers. If the cut remains, the government might find difficult to raise Rs 2,320 crore more from the RDF.

To clear loans raised by pledging RDF, Rs 26 crore is paid every month and Rs 625 crore after every six months with due date of December 31 and Jun 30. The payment has to be paid back in seven instalments by December 2023.

“As of now, our financial needs are being met, we are carrying out development and also paying back the loan but if the interim cut is imposed things are going to be very tough,” a senior mandi board functionary told HT.

This is for the first time that the central government has imposed a cut since the state started charging the fund. The Centre has also asked that how and what percentage of RDF is being spent on improving infrastructure of procurement centres.

The Centre’s ministry of consumer affairs, food and public distribution has told the state that in case, relevant information is not received, any relief will be subjected to necessary adjustment or recovery.

Our financial needs are being met, we are carrying out development, but if interim cut is imposed, things will become tough. A SENIOR MANDI BOARD FUNCTIONARY